On March 13th, the European Commission announced the adoption of Regulatory Technical Standards ("RTS") for the implementation of the Capital Requirements Regulation and Directive ("CRR/CRD"). The CRR/CRD, which was effective on January 1, 2014, provides for the adoption of a large number of delegated and implementing acts specifying how the regulators in European Union ("E.U.") member countries shall comply with the obligations required by the CRR/CRD.
The RTS adopted last Thursday define the ways in which regulators and industry participants must make disclosures concerning securitizations, measure losses from derivative positions and counterparty failure, and specify the types of instruments that can be used for paying bonuses.
A total of nine RTS were adopted. The European Parliament and European Council ("E.C.") will have one month to object to the RTS; the objection period may be extended for an additional two months. Following the expiration of the objection period, the RTS will be published in the Official Journal of the European Union and will be effective on the twentieth day following the date of their publication. See E.C. Press Release; E.C. Frequently Asked Questions.
Earlier in the month the E.C. adopted RTS regarding the identification of financial institution staff whose professional activities have a material impact on an institution's risk profile. These "material risk takers" are the individuals who must comply with E.U. rules on variable remuneration (including bonuses). E.C. Press Release.
The European Banking Authority, European Securities and Markets Authority, and the European Insurance and Occupational Pension Authority jointly published draft guidelines on how regulators should cooperate in the supervision of financial conglomerates. Topics discussed include the mapping of the financial conglomerate structure; the coordination of information exchange, supervisory planning and coordination of supervisory activities in emergency situations; and the supervisory assessment of financial conglomerates. Comments should be submitted on or before June 12, 2014. EBA Press Release.
The European Parliament's Economic and Monetary Affairs Committee endorsed anti-money laundering rules previously approved by the Economic Affairs and the Justice and Home Affairs committees. The rules would require the public disclosure of the ultimate beneficial owners of different legal arrangements, including companies, foundations and trusts. Economic and Monetary Affairs Committee Press Release.
On February 14th, the European Securities and Markets Authority ("ESMA") asked the E.C. to clarify the definition of a derivative under the European Market Infrastructure Regulation. ESMA notes that no standard definition for what constitutes a derivative currently exists within the E.U. ESMA stressed that this is particularly the case for foreign exchange forwards and physically settled commodity forwards. ESMA Press Release.